Context: Funding for the various production linked incentive schemes (PLI) has more than doubled in the recent Union Budget 2025-26. This underscores the importance for the manufacturing sector and the government’s push for making India self-reliant and a major global manufacturing hub.
Relevance of the topic:
Prelims: PLI Scheme
Mains: PLI Scheme: Objectives, Impacts, Challenges
Increase in PLI Budget (2025-26)
- FY26 (BE): ₹19,482.58 crore
- FY25 (RE): ₹9,360.36 crore
- Growth: 108% increase
About Production Linked Incentive (PLI) Scheme
- Aim: To scale up domestic manufacturing capability, accompanied by higher import substitution and employment generation.
- Launched in March 2020, the scheme initially targeted three industries:
- Mobile and allied Component Manufacturing
- Electrical Component Manufacturing and
- Medical Devices.
Later, it was extended to 14 sectors.
- Key Starting Materials (KSMs)/Drug Intermediates (DIs) and Active Pharmaceutical Ingredients (APIs): Department of Pharmaceuticals
- Manufacturing of Medical Devices: Department of Pharmaceuticals
- Pharmaceuticals drugs: Department of Pharmaceuticals
- Large Scale Electronics Manufacturing: Ministry of Electronics and Information Technology
- Electronic/Technology Products: Ministry of Electronics and Information Technology
- Telecom & Networking Products: Department of Telecommunications
- Food Products: Ministry of Food Processing Industries
- White Goods (ACs & LED): Department for Promotion of Industry and Internal Trade
- High-Efficiency Solar PV Modules: Ministry of New and Renewable Energy
- Automobiles & Auto Components: Department of Heavy Industry
- Advance Chemistry Cell (ACC) Battery: Department of Heavy Industry
- Textile Products: MMF segment and technical textiles: Ministry of Textiles
- Specialty Steel: Ministry of Steel
- Drones and Drone Components: Ministry of Civil Aviation
Key Features of the PLI Scheme:
- Outcome-based Incentives: Incentives will be disbursed only after the production has taken place.
- Incremental Production Focus:
- The calculation of incentives is based on incremental production at a high rate of growth.
- In some sectors such as advanced chemistry cell batteries, textile products and the drone industry, the incentive will be calculated on the basis of sales, performance and local value addition done over the period of five years.
- Emphasis on Scale: The scheme focuses on size and scale by selecting producers who can deliver high volumes.
- Strategic Sectors: Sectors chosen include, those with:
- Cutting-edge technology
- Potential for integration with global value chains
- High job-creation capacity
- Sectors closely linked to the rural economy.
- WTO Compliance: The scheme is designed to align with World Trade Organisation (WTO) commitments, as the quantum of support is not directly linked to exports or value-addition.
Read More: Production Linked Incentive
PLI Scheme for Smartphones: A Case Study
- Growth in Smartphone Production & Exports:
- India has become a key player in global smartphone exports.
- Handsets are now the second highest exported product from India
- Exports Value (April-November 2024): $13.1 billion
- Target for 2025: More than $20 billion in smartphone exports.
- Investment & Incentive Disbursal:
- Total Investment Committed: ₹11,324 crore
- Total Production Target: ₹10.7 lakh crore
- Disbursed Incentives (2022-25): ₹8,700 crore to 19 eligible companies
- Investment Made (as of June 2024): ₹8,282 crore

- Employment Generation:
- Direct employment created: 1,22,613 jobs in three years
- Indirect employment: Increased opportunities in logistics, retail, and supply chain
- Challenges Faced:
- Failure of Some Domestic Players: Companies like Lava, Bhagwati, and Optiemus failed to meet PLI targets.
- Investment-Subsidy Mismatch: Actual investment by companies (₹8,282 crore) is slightly lower than total disbursal (₹8,700 crore).
- Over-Reliance on Global Giants: Over 75% of incentives went to Apple's contract manufacturers (Foxconn, Tata Electronics, Pegatron).
The PLI scheme, complemented by the National Manufacturing Mission, is pivotal in making India a global manufacturing hub.
By boosting investment, reducing import dependence, and enhancing domestic value addition, it strengthens Make in India and Atmanirbhar Bharat. Effective implementation and infrastructure development will be key to its long-term success.





